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It doesn't help that making chairs is not rocket science. Design has long been an Italian strength, but chairs are easily copied. Manzano's entrepreneurs often argued with one another about who originated new models, but now their quarrels have gone global. They complain that Chinese manufacturers are simply borrowing what they find in catalogs and on websites. The Italians insist they still have an edge when it comes to quality, especially with chairs made out of fine wood or upholstered in top-quality leather. While the Chinese are particularly good at mass-producing huge amounts of identical chairs cheaply, the Italians can tailor their production to far smaller and more specific needs. Masarotti, the district president, cites hotels as prime customers, because they often want relatively limited numbers of the same chair in a variety of colors. But even here the Chinese are muscling in. "We've lost the Japanese [hotel] market," Masarotti says. "We used to sell 2,000 to 3,000 chairs to equip an entire hotel, but now if we send 100 for the lobby and bar we're happy."
How can the Italians fight back? Alessandro Calligaris has a blunt answer: "We have to win the loyalty of our customers." He is 60, with a fuzz of white hair and a reputation as the most successful businessman in the chair triangle. His company, the eponymously named Calligaris, was started by his grandfather in 1923 and is still growing. Revenues last year rose by 12% to $140 million. His first big move, over a decade ago, was to figure out that the future lay in more than chairs. The Calligaris furnishing collection, sold under the slogan "Italian living," this year included sofas and beds for the first time, as well as shelves, tables and, of course, chairs. One big shift came in 2000 when the firm began buying and processing its wood in Croatia, at a plant near the forests where it's cut. Calligaris switched some of the upholstery work to Bosnia, where wages are a tenth of Italy's. And he's put a relentless focus on making his own branded products rather than manufacturing for other companies. In 1997, 35% of the firm's output was of no-name furniture. Today it's 1.5%. The firm's 12,000 clients include marquee names such as Bloomingdale's in the U.S., and Calligaris has just opened a subsidiary in Japan. But "we still need to invest more, to be closer to the market," he worries. One plan under consideration: establishing a worldwide franchising network.
"Everybody thought Calligaris was mad when he started, but now he is a model for all of us," says Gino Piani. He runs a company called Forsedia, which has 50 employees, three lines of furniture and slumping sales. Piani's answer is Calligaris-inspired: he is trying to create his own brand and sales network together with fellow entrepreneurs. Two of the four firms he hoped to team up with have since dropped out but Piani doesn't need to look very far to see that he needs to do something. A company called Sibau located just down the road from his factory collapsed in May, with the loss of 50 jobs. "They stayed still too long," Piani laments. "They thought nobody could make chairs the way they did."
The Manzano district as a whole is working on a strategy that it hopes will help all the chair manufacturers: it's trying to create a certified hallmark analogous to the one used by the ham producers of San Daniele, 20 km away. To qualify, chairs would have to be made locally and meet stringent quality standards. Each hallmarked chair would be numbered for authenticity. "The first thing we need to do in this global world is to have an identity. If we don't, we'll disappear," says Fabrizio Mansutti, president of Promosedia, a local trade association that is sponsoring the plan. While the hallmark is in its early days—only 15 firms have signed on—the sentiment behind it is widely endorsed. "We need to sell 'made in Italy,'" contends Luigi Cozzi. His firm, Idealsedia, once shipped low-end chairs to mass retailers including Target in the U.S., but it's now trying to go upmarket. For a while it used Chinese leather to cut costs but has switched back to Italian.
Yet even as they talk about focusing on Italy's strengths, officials for most of the bigger firms are shifting production out of the Manzano district. Cozzi, for example, has relocated his wood treatment to Romania, where Idealsedia now has 300 workers—50 more than it has in Italy. Such cost-cutting moves are a matter of survival for many. Natuzzi, a major Italian sofamaker headquartered in Santeramo, still manufactures its high-end products in Italy. But less expensive sofas aimed at price-conscious North American consumers are now made wholly at a factory Natuzzi operates in Shanghai. The company had no choice but to open a Chinese plant, says Daniele Tranchini, Natuzzi's chief global sales and marketing officer. "Half of our sales come from North America, and that market has been hit more than most with cheap products from China," Tranchini says. Besides, he adds, "Everyone recognizes it's an Italian product. Where it is manufactured has really become a secondary issue."
The shift eastwards is hastening the demise of the chair triangle. The Minin brothers, for example, formerly sold one type of chair that constituted about 10% of their output to Calligaris. But four years ago, Calligaris began making the same model itself, in Croatia. "The big firms are killing the little ones," gripes Valerio Minin. Pessimists in the chair triangle—and there are plenty these days—say perhaps 10 of the biggest firms will survive, each with a small network of suppliers, and that everyone else will go under. Piani of Forsedia reckons that about half of the firms still in business are in financial trouble and that a further 20% are heading into it.
That's too bleak an estimate, say the optimists. Luciano di Bernardo, managing director of a Cividale-based bank that is one of the key lenders to the district, even reckons that the worst of the crisis may be over. While chair exports continue to fall, he says bank-lending data shows that investment in the district is picking up quite strongly this year. About one in five firms is having difficulties and needs to change, he estimates, but the district as an industrial cluster does have a future, albeit in a different form. "The production can go wherever," di Bernardo says. "But there's an absolute need to keep the brains and the technology here." Italy can only hope that he's right.